Texas Administrative Code
Title 7 - BANKING AND SECURITIES
Part 7 - STATE SECURITIES BOARD
Chapter 109 - TRANSACTIONS EXEMPT FROM REGISTRATION
Section 109.14 - Oil, Gas, and Other Mineral Interests

Universal Citation: 7 TX Admin Code ยง 109.14

Current through Reg. 49, No. 38; September 20, 2024

(a) It is the intent of the State Securities Board that §109.13(a) - (c) and (j) of this title (relating to Limited Offering Exemptions) apply to transactions made pursuant to the Securities Act, §4005.021, and that the terms defined in §109.13(a) - (c) and (j) of this title have the same meanings for purposes of §4005.021 as they do for exemptions set forth in §4005.012 and §4005.013 of the Securities Act.

(b) For the purposes of §4005.021, an employee of the owner of an oil, gas, or mineral lease, fee, or title may aid such owner/employer in selling interests in such lease, fee, or title and will not be considered an agent required to be licensed under the Act provided all the following conditions are satisfied:

(1) the employee was not hired for the purpose of offering or selling such securities;

(2) the employee's activity involving the offer and sale of such securities is strictly incidental to his bona fide primary nonsecurities-related work duties; and

(3) the employee's compensation is based solely on the performance of such other duties, i.e., the employee does not receive any compensation for offering for sale, selling, or otherwise aiding in the sale of securities.

(c) In addition to sales made under the Securities Act, §4005.021, the State Securities Board, pursuant to the Act, §4005.024, exempts from the registration requirements of the Act, Chapter 4003, Subchapters A, B, and C, the sale of interests in and under oil, gas, and mining leases, fees, or titles, or contracts relating thereto (hereinafter called securities), by the owner itself, or by a registered dealer acting as agent for the owner, provided all of the conditions of § 109.13(k) or (l) of this title are met. The purpose of this subsection is to provide a mechanism which will allow for sales of the securities listed herein to accredited investors where the conditions of § 109.13(k) or (l) of this title are met.

(d) Exemption for transactions among persons in the oil and gas industry.

(1) In addition to offers and sales made pursuant to the Act, §4005.021, the State Securities Board, pursuant to the Act, §4005.024, exempts from the securities registration requirements of the Act, Chapter 4003, Subchapters A, B, and C, and the dealer and agent registration requirements of the Act, Chapter 4004, the offer and sale of any interest in or under an oil, gas, or mining lease, fee, or title, or payments out of production in or under such leases, fees, or titles or contracts relating thereto by the owner or an agent for the owner when such offer or sale is made to persons and/or companies each of whom the owner or owner's agent shall have reasonable cause to believe and does believe meets the following criteria:
(A) is engaged in the business of exploring for or producing oil, gas, or other minerals as an ongoing business or is engaged in the practice of a profession, or discipline, which is directly related to the exploration for, production of, refining of, or marketing of oil, gas, or other minerals such as the interest being sold; or

(B) is a landman, drilling company, well service company, production company, refining company, geologist, geophysicist, petroleum engineer, earth scientist; or

(C) is an executive officer of a company whose primary plan of business involves either subparagraphs (A) or (B) of this paragraph.

(2) The offer to a person who did not meet the criteria set forth in paragraph (1)(A)-(C) of this subsection will not cause the exemption to be lost if such offer was not made indiscriminately.

(3) For purposes of this rule, an "agent for the owner" includes the following:
(A) officers, directors, and employees who are actively engaged in the day-to-day activities of the owner;

(B) independent landmen, engineers, geologists, and consultants who have a contractual working relationship with the owner;

(C) persons who meet the dealer registration requirements of Chapter 4004 of the Securities Act; and

(D) persons who represent the owner in transactions exclusively with persons described in paragraph (1)(A)-(C) of this subsection.

(4) This exemption includes sales at auction.

(e) Any person who acts as an agent of an owner or a purchaser in connection with a sale of an interest described in subsection (d) of this section to a person who does not meet the criteria set forth in subsection (d)(1)(A) - (C) of this section will not be exempt from the dealer registration requirements of Chapter 4004 of the Act unless another exemption is available.

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